Lawsuits and the Effect on My License?

[jcmeyer26]

When application is submitted through State Farm the policy is in force as of that moment. The client is saying that since they were told it was in force and then later told that it was canceled cause the interview was not completed, that it was misrepresented. Also I did contacted the client before they notified me that they were sick and let them know it was canceled and ask them to go forward with the steps to re-issue it which they agreed to do and even submitted to me a new signed application only to call me 1 day later and disclose the illness.

 

[Josh]

When application is submitted through State Farm the policy is in force as of that moment. The client is saying that since they were told it was in force and then later told that it was canceled cause the interview was not completed, that it was misrepresented.

They can say anything they'd like, but at best they had a conditional offer of coverage. When I was running appointments for AIL (technically NILICO) we'd do that all the time, give them a *conditional receipt*. The condition there was that they weren't lying on the application and that everything came back clean. I'm not familiar with the way SF does it, but it would be *extremely* unusual for them to bind the coverage on a life policy on the spot when you took the application.

Also I did contacted the client before they notified me that they were sick and let them know it was canceled

Good job. Bonus points if you have documentation of that. If not, I'd write down the notes about when that happened to the best of your recollection.

and ask them to go forward with the steps to re-issue it which they agreed to do and even submitted to me a new signed application only to call me 1 day later and disclose the illness.

They're grabbing at straws dude (or dudette). They applied for insurance knowing they were ill and they are trying to get the insurance company to take what is most likely a fraudulent life insurance application. There are most likely material misrepresentations on that application which in and of themselves would be used to invalidate the policy.


You should probably stop having any communication with the client/ex-client. Nothing good will come of it. If you haven't already, I'd talk to the agency principle, actually I'd probably email them, and ask them if they want to discuss this with mother state farm (I wouldn't mess with the e&o at this point).


Again, it really looks like they're trying to pull a fast one on State Farm and they're giving you grief about it because it's their desperate attempt to collect on a life insurance policy they clearly weren't interested in enough to buy. It sounds like the only reason they were interested is they knew they may have some medical issues.

I know it's easier said than done, but I would just relax about it and not talk to anyone until they start serving you with documents. Then and only then would I start getting too involved with it more than you are. Mother State Farm and that agency principal most likely are going to be handling this in it's totality. If you're really worked up about what to expect, I would ask to talk to the State Farm folks that will be handling the issue. They're the ones with the big pockets the clients/ex-clients are looking to get the money from.

 

[tlmarketing]

Don't sweat it, you're not the target, State Farm is....deep pockets theory!

It will have zero effect on your license....If you get named in the lawsuit, you will probably have to disclose to the carriers you are appointed with and also at license renewal time, no big deal.

Now that you are aware of litigation....if you had e&o coverage I think you are supposed to give them a heads up.

I would also tell you as others have that now is the time to stop talking to anyone other than your lawyer if needed....especially do not speak with the insured, etc.

 

[VolAgent]

When application is submitted through State Farm the policy is in force as of that moment. The client is saying that since they were told it was in force and then later told that it was canceled cause the interview was not completed, that it was misrepresented. Also I did contacted the client before they notified me that they were sick and let them know it was canceled and ask them to go forward with the steps to re-issue it which they agreed to do and even submitted to me a new signed application only to call me 1 day later and disclose the illness.

Actually, odds are it wasn't inforce the moment it was submitted. If they offered money at application, it may have been conditionally bound which isn't the same. When they didn't complete underwriting in a timely fashion, the conditional binding expired.

Also, it is very unlikely there will be any fallout to you. You would have been covered by the agents E&O and hopefully when you got yours, it has a retro date back to when you first started. If so, it may end up a claim, but hardly the end of the world.